The DXY (US Dollar Index) broke last week below the 1D MA50 (blue) for the first time since August 11. Despite the drop, the 2022 Bullish Megaphone (or cylinder) is intact. However along with the emergence of a short-term Channel Down (Lower Highs/ Lower Lows), we see the 1W RSI turning on a Bearish Divergence as with Lower Highs and Lower Lows it is going against the Megaphone's Higher Highs/ Higher Lows.
The patterns shown on the chart must be respected and breakouts followed. We have denoted potential movements based on:
a) Break above the Channel Down = Bullish continuation within the Megaphone. b) Break above the 1D MA50 = Bullish test of top of Channel Down. c) Break below the Megaphone but still within the Channel Down = Bearish. d) Break below the 1D MA100 (green) = Bearish outside the Megaphone, targeting the 1D MA200 (orange).
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